on Wednesday projected Nepal's economic growth at 6.2 per cent for this fiscal year and said the country has the potential to achieve and sustain higher growth rate.

The Manila-based regional lender in its latest Nepal Macroeconomic Update released on Wednesday said the country's economy is anticipated to grow at 6.2 per cent in fiscal year 2019 and 6.3 per cent in fiscal year 2020.

"The outlook is for a stable growth on the back of strong domestic demand, fuelled by a larger budget allocation to sub-national governments and accelerated post-earthquake reconstruction, said ADB Country Director for Nepal Mukhtor Khamudkhanov.

Challenges to smooth implementation of fiscal federalism and maintaining fiscal discipline at large could pose potential risks to the outlook, he pointed out

He said Nepal has the potential to achieve and sustain higher growth rate over a long period of time if these challenges are addressed.

The Bank predicts that the agriculture sector may grow up to 4.5 per cent from 2.8 per cent of the previous year, owing to a good monsoon that is expected to boost paddy production to 5.5 million tonnes, a rise of 8.4 per cent from the previous year.

Likewise, the industry sector is expected to expand by 7.1 per cent this year due to improved electricity supply and efforts to improve the investment climate.

And the services sector is likely grow by 6.4 per cent in FY2019 with the expansion of wholesale and retail trade, hotels and restaurants, and financial intermediation, the report said.

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